Pungkut mining plan drives Sihayo

SIHAYO Gold has released results of a revised plan for mining the first stage of its Sihayo Pungkut gold project in Indonesia, sending its shares soaring 25%.
Pungkut mining plan drives Sihayo Pungkut mining plan drives Sihayo Pungkut mining plan drives Sihayo Pungkut mining plan drives Sihayo Pungkut mining plan drives Sihayo

The company recently cited challenging market conditions as the reason it needed to re-examine the project to identify the optimum project development path.

Sihayo today said it had come up with a plan for mining the near-surface mineralisation at the Sihayo deposit as part of a two-pronged development approach.

The highlights for the initial six-year, stage one scenario include the mining of 4.6 million tonnes of ore at 2.4 grams per tonne gold to achieve a 750,000t processing rate.

This would result in 276,000 ounces of gold production being recovered, while average processing recoveries would reach 78%.

Average site cash operating costs total $US634 per ounce, while estimated construction capital costs are expected to be $55-$60 million ($A59-$65 million).

Sihayo estimated in March that overall capital costs for the stage one development would be about $72 million, with average cash costs of $615-$645/oz.

Initial expectations also included a nominal 1Mtpa carbon-in-leach processing plant, which would have produced 60,000ozpa.

Sihayo said the updated plan reflected improved outcomes from metallurgical test work that had been completed. It also reflected coarse grinding requirements and lower retention times than previously identified.

"We continue to refine the process plant operating parameters, mine design and schedule, and associated operating costs that will also be impacted by further results from pending metallurgical test work on stage one due for completion in November," Sihayo said.

The company said implementing alternative power solutions such as a coal-fired power plant could potentially reduce processing costs, but would require additional capital expenditure.

The full evaluation of alternatives would take several months to be refined.

The ounces produced from the operation could increase, with a further 700,000z within the measured and indicated resource category being considered for extraction.

"Stage one is aimed at developing an operating scenario that quickly repays initial capital and provides an operating footprint to realise the value from known resources at depth, as well as from other exploration prospects such as Hutabargot," Sihayo chief executive Stuart Gula said.

Sihayo has reduced in-field exploration work, and prioritised permitting and approvals to advance the projects.

In addition, management is working with the company's major shareholders relating to funding requirements.

The project, in North Sumatra about 200km northeast of Padang city, is 75% owned by Sihayo.

Shares in Sihayo gained 25% on the news, to A4c.

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